LONDON, Oct 5 (Reuters) - Copper prices retreated on
Wednesday after touching their highest in nearly two weeks due
to a resurgent dollar and persistent worries that central bank
interest-rate hikes will hit metals demand.
Zinc and lead, however, surged on smelter shutdowns amid
high power prices.
Three-month copper on the London Metal Exchange
dropped 0.6% to $7,671.50 a tonne by 1600 GMT after earlier
touching a high of $7,788, the strongest since Sept. 22.
"The backdrop is still grim. The Fed is still determined to
go after inflation and China's economy - consumer of half the
world's commodity supply - is still struggling," said Tom Price,
head of commodities strategy at Liberum.
Copper jumped 2.8% on Tuesday and other risky assets like
stocks also rallied on hopes that central banks may slow down
the pace of monetary tightening, but Price said that was
"For over a year, the Fed has not budged from its focus to
curb inflation. Its hawkish message has never changed. And yet
the market keeps hoping that there might be some kind of switch
Price forecasts another 10%-30% downside over the next 12
months in most base metals prices.
Weighing on the market was a stronger dollar index,
making commodities priced in the U.S. currency more expensive
for buyers using other currencies.
Also undermining copper was news of a possible labour deal
in a mandatory mediation process to avoid a strike at
Antofagasta Minerals' Los Pelambres copper mine.
LME zinc reversed earlier losses and gained 0.3% to
$3,056.50 a tonne after Glencore said it will place its
Nordenham zinc smelter in Germany on care and maintenance from
LME lead also pushed higher, surging 5.1% to $2,035
a tonne, the highest in over a month, on worries of tight supply
after Nyrstar said on Tuesday it would shut its Port
Pirie lead smelter in Australia for 55 days.
The Nyrstar news came amid falling inventories, which have
dropped in LME-registered warehouses by nearly a fifth over the
past two months to the weakest levels since October 2007.
LME aluminium rose 0.4% to $2,358 a tonne, nickel
gained 2.2% to $22,530, but tin slipped 0.2% to
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(Reporting by Eric Onstad; editing by Bernadette Baum and David